As the Tide Turns: Macro Forces Tailwinds for Gold, Headwinds for USD

Patience pays. From the petro-yuan to Q.E. to trade wars to fiat printing press madness to a weak-dollar-preferring administration to Russian/Chinese state gold positions…the stars are aligning in a serious way for the gold price. And against any sustainable USD strength.

Growing U.S. deficits combined with higher rates overseas are likely to continue to draw investors away from the greenback and into other currencies.

Even more importantly, seasonal gold prices show the metal tends to put in an interim bottom at the end of March before kicking off a strong rally into the end of May.

The dollar’s recent bout of strength could see some follow-through, but I still think it’s going to run into heavy resistance.

Since mid-January, the DXY has been unable to break above 90.50 despite several attempts. And given the DXY’s most recent action, it looks like the declining 50-day moving average is acting as somewhat of an upper limit.

With possibly limited dollar upside from here and the start of what has typically been seasonal strength for the next two months, gold could see a good run over the next several weeks.